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Morgan Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul

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Answer #1

Expected cash outflow

$220*10% = $22

$610*30% = $183

$830*50% = $415

$710*10% = $71

Total = $691

PV factor of 9% and 2 years

PV factor = 0.84168

So the value is $691*0.84168

= $581.6

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